One Oil Company Defaulted to Audit Enquiry- Haruna Saeed, NEITI Boss

Mr. Haruna Yunusa Saeed has featured as Personality of the Month in a past edition of the Economic Confidential. Before his appointment as the Executive Secretary of Nigeria Extractive Industries Transparency Initiative (NEITI), he contested for governorship of Kaduna State in 2007 but lost to the incumbent. Prior to that, he was the Accountant General of the state for eleven years. He had stints as lecturer at Ahmadu Bello University Zaria and also General Manager of Kaduna State Industrial and Finance Corporation in 1995. In this interview with Editorial Team of the Economic Confidential, he gives insights into the function of his agency and some relevant development in its statutory responsibilities.

QUE; Give us a brief on the oversight function of NEITI.

ANS: well, the act is very clear for our oversight functions over the extractive industries, both oil and gas and the solid minerals. First is to ensure that the revenue flow from the extractive industries to the federation. What is supposed to be received is being received. Secondly, when the federation receives the funds, they account for it appropriately after the proper remission and accounting then the allocation to the rightful beneficiaries. Then we talk of the application by the recipients. How well they apply the funds. These we do by conducting annual audits, and then we have the facts we are expecting to disseminate to the general public. We have many actors, stakeholders. Some of them are key to what we do like the civil society Organization. Their responsibility is equally to enhance the dissemination of information, sensitization of the minds of the general public, Nigerians so to say. This is the oversight function in a nutshell, the responsibility of NEITI. This significantly differs from many other countries implementing what is called the EITI principles. While in some countries they look at simply the revenue side which is not like Nigeria that looks further than just the revenue. What that means is that they look at the revenue to see if it is intact and ensure there is no discrepancy in figures, which does not involve knowing the exact quantity of oil that produces the money. In our own case we conduct financial process and fiscal audit so that we are sure to know the quantity and equally the process of extraction. So right from the price rate to prospect for any natural resources, transparency, accountability and all that is involved as the procedure is monitored by NEITI. That’s why our mode of operation is more encompassing than others.

QUE: have the states from the Niger Delta been able to justify the huge allocation of funds in terms of application?

ANS: first and foremost, there are some challenges. In implementation of some of the aspects of the Act establishing NEITI. One key point is you cannot go beyond the line. The constitution has a demarcation that one has to cross between the federation, the federal government and the states. So the beneficiaries you are referring in this case are the States. It’s not easy to circumvent the constitution barriers to see if the Niger Delta States or any other State for that matter is actually utilizing the resources equitably to the benefits of the people. While we cannot do that directly, that’s where the civil service organization comes in. we empower them with the necessary information they need to know in order to equally educate the general public or to hold their government accountable. We also by the responsibility of having to disseminate information to the general public, do significantly empower the people to have actual figures of which to hold their governments accountable. Even if we cannot hold the government responsible, we empower the public to do so.

QUE: how do you monitor the daily capacity of oil and gas produced in order to ensure that the industries involved gives NEITI the exact and not fictitious figures?

ANS: The aspect of audit is what you require in order to authenticate any data given by those in the extractive industries. That’s why we commission independent organizations to authenticate, ascertain the correctness or otherwise of these figures. Like I earlier mentioned this audit is processed fiscal and financial in order to ensure accuracy of data involved. However, we are a new organization. What we hope to do in the future is to have this information coming from different sources of those in the industries, the DPR in the case of oil production and any other source that can help so that we can compare the information available and commission an audit to maximum effect.

QUE: How soon will the audit report be out?

ANS: The 2005 audit, which is the second one and the most current is about to be finalized. We are soon having the West African conference and the Board meeting, where we hope to be given a presentation of the first part of the audit report. Afterward, we can give a tentative date when to receive the final report.

Since the enactment of the act establishing NEITI, have you encounter constrains that may require amendment to further empower you in your oversight functions.

ANS: there is no responsibility that does not come with certain challenges. NEITI is no exception. What we normally encounter, the act stipulates prescribed punishments for non-compliance especially in terms of giving out information. When the information does not come as required, we have the responsibility, or the act has empowered us to impose sanctions including a fine. A minimum of 30 million naira would be levied on companies. But unlike the EFCC that have direct power for prosecution, we don’t. We have to go through the EFCC, the police and other relevant agencies. That’s an impediment in the discharge of our duties. We have not gotten to the level of charging any offenders to court yet but that is not to say that we don’t have any company that have defaulted. We are trying to impose certain penalties on one of the erring company who defaulted in the area releasing data.

QUE: Have you caught any defaulter in the oil and gas sector. If yes, what sanctions did you impose.

ANS: Of the oil companies we have audited, one company by name Cavendish has defaulted in responding to audit request. Basically they did not adhere to the rules and regulations of responding. They were two before but the other company has since responded and fulfilled the requirements.

QUE: When we talk of extractive industry, most Nigerians simply refer to oil and gas. Does your oversight function also include other industries like mining companies?

ANS: The extractive industries are not just about oil and gas. It includes all the companies that deal with mineral resources. All solid minerals are supposed to be covered. We have started looking at that to ensure all that is being done in that sector come under our searchlight. Discussions are already going on with the Minister of Mines and Power and also the Minister of states for Finance to ensure that the solid mineral sector receives adequate attention. That is in terms of revenue mobilization and the distribution.

QUE: Often there are conflicting reports from NNPC, DPR, CBN and the office of the Accountant General of the Federation on revenue from the oil sector. How does NEITI reconcile the differences in order to get the accurate figures on oil revenue?

ANS: Actually, this has been the problem. It was one of the key issues that were highlighted in the 1999 to 2004 audited report. There’s that problem of information flow between different arms of government. The former president did set up an Inter Ministerial Task Team. This team was given the mandate to do remedial mediation exercise. The mediation process report is yet to be given to Mr. President. So much has been done. One aspect of that report is this issue about conflicting figures and the conflict of information flow. Presently we have an improved data gathering mechanism. Constant reconciliations are being carried out. Currently CBN gives AGF information as at when due, which was not there before. There’s also a constant reconciliation going on now, monthly before the Federation Account meeting.

QUE: Is NEITI a member of the Federation Account.

ANS: No. We are not members of the Federation Account Committee. But we have made a case to be part of the meeting as observers because of the nature of our job. This we have discussed with the OAGF who is equally now talking to the Chairman of the Federation Account Allocation Committee.

QUE: Do you know the volume of daily production in the oil sector.

ANS: Well, I can not give you this information first hand. We don’t receive daily production figures directly. The DPR collates this information at the production terminals. That’s what they can equally forward to us. But we don’t collate that from the DPR on a daily basis.

QUE: What is the rate of compliance to NEITI’s oversight functions from the companies in the extractive industries?

ANS: The compliance in terms of response to audit process by the companies is about 100 percent compliance.

How soon will the Audit Report become public?

Note that when we receive the audit report, we examine it. By the time we finalize on it, the Act mandates us to report to the President. The second leg is that we have to also report to the National Assembly, which the Act also stipulates. Thirdly, which is final, we disseminate to the general public.